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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (13986)	2/22/2002 12:42:15 AM
From: Don Earl	Read Replies (1) \| Respond to of 78659

Timba, A few things I feel I should clarify before I express any more investment opinions (not the same thing as investment advice). First, I think every private investor needs to find an investment style that fits their own personal financial situation, investment goals, and tolerance for risk. For myself, I could probably more properly be called a value trader rather than a value investor. A long term investment usually means I screwed up a trade so badly that I let myself get buried in it. At present I'm probably spending more time screening for the next Enron, and looking for bargains on put options, than I am looking for the next Microsoft on a stock position. As a result, I'm probably just about the worst person in the world to ask about buying stock right now. I honestly don't recall any remarks I might have made concerning MFW. I did pull up the profile to try to refresh my memory, and while I didn't like what I saw, it still didn't ring any bells. On the other hand, I do remember being super bearish on MOVI and the damn thing went up close to 1000%. I still think their accounting makes Enron look respectable, but fundamentals don't always translate to predictable stock movement. Whatever. I took a quick look at FRD and XNR. I didn't do anything resembling DD, so I'll just give my first impressions and you can do whatever follow up that seems appropriate. XNR has a higher debt to equity ratio than what I like to see, but it isn't so far out of line as to be unacceptable if everything else looks okay. Cash looks to be adequate. The part where it says, "Net income from continuing operations" is something I tend to look at as a red flag. The implication is that there are "discontinued operations" hiding in the woodpile. Double check the SEC filings to see what the deal is and go from there. FRD has a much better debt to equity ratio, but they don't have much in the way of cash. It appears the stock pays dividends, which might account for the lower cash balance, but you might want to target some research into following the money. I don't follow the sector at all, so I don't have any idea what their market conditions are like. I'll take a stab in the dark and guess that things are kind of slow and that any upside potential will be controlled by improving market conditions. Maybe someone with more background in steel manufacturing can give you better input on what market conditions are like. Anyhow, I'll just offer some suggestions on where some extra DD might be well spent, rather than thumbs up or down. I'd like FRD better if they had more cash and XNR better if they had less debt, but that's more personal prejudice talking than anything else. I tend to be willing to give up something in the way of earnings for a clean balance sheet, where another investor might be willing to give up something in the balance sheet in exchange for earnings. In the under $3 price range, it usually means picking your favorite 2 out of 3 when it comes to cash, debt and earnings, at least that seems to be the usual pattern in any issue trading at a discount to book.